• The Star Staff

PREB to review 10-year infrastructure plan PREPA submitted to FEMA

By The Star Staff

The Puerto Rico Energy Bureau (PREB), the island’s energy regulator, will hold a technical conference today to determine if the 10-year infrastructure plan submitted last month by the Puerto Rico Electric Power Authority (PREPA) to the Federal Emergency Management Agency (FEMA) is in alignment with the utility’s integrated resource plan.

The investigation comes as the relationship between PREPA and LUMA Energy is becoming increasingly strained. LUMA Energy and the Public Private Partnerships (P3) Authority signed an agreement in June for the private firm to operate PREPA’s transmission and distribution (T&D) system.

Besides delays in payments, LUMA Energy has complained that it was given little participation in the development of the 10-year infrastructure plan, which follows FEMA’s approval of $12 billion for the utility for repairs last year.

“LUMA is also very concerned with the misalignment of PREPA as it relates to the obligations under the [Operations and Maintenance Agreement] including delays in payment to LUMA,” the operator said in documents.

PREPA Executive Director Efran Paredes Maisonet said in documents filed with the PREB that LUMA participated in more than 20 meetings during which the 10-year plan was discussed. However, he noted that during the front-end transition period, PREPA is responsible for the T&D system’s operations.

“Furthermore, the 10-year plan is now completed and it was sent to LUMA on December 6,” Paredes said.

The strain in the relationship between PREPA and LUMA became evident after PREPA’s board agreed at its December meeting that it would not pay LUMA for variable expenses unless the back-up documentation justifying them was submitted, regardless of any determinations made by the P3 Authority, which is the manager of the LUMA contract. PREPA has paid the fixed fees required by the contract so far but has not yet paid the $32 million that LUMA has charged in expenses incurred since September, including salaries of executives.

However, it appears that now PREB wants to intervene. The regulator said that in December it became aware of the 10-year plan posted in the utility’s website and decided to investigate it. The PREB convened a technical conference for today and ordered Paredes as well as the project manager, Fernando Padilla, to appear.

Meanwhile, both the island House and Senate are slated to investigate everything related to the LUMA Energy contract. Recently, documents from the federal Financial Oversight and Management Board showed that PREPA requires $894 million from the bankrupt government to execute the contract with LUMA Energy because the utility only has $10 million. The funding is needed to avoid rate hikes.

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